29 Oct 2020

Survey shows age, gender gap in New Zealand's financial knowledge

11:38 am on 29 October 2020

A new survey has exposed a gender gap in the financial knowledge of Kiwi men and women, showing only half as many women as men answered all questions correctly, and that the gap in financial knowledge widens with age.

Close-up of New Zealand fifty dollar banknotes

File image. Photo: 123RF

The Commission for Financial Capability surveyed 3000 New Zealanders about their understanding of basic financial concepts like interest, inflation and risk diversification.

In the youngest age group (18-34), men and women started with the same score but men increased their financial knowledge more with age.

Jane Wrightson

Jane Wrightson. Photo: supplied

Retirement commissioner Jane Wrightson told Morning Report the results were: "A mixture of psychology and mixture of background and education, I think. It's important to point out that women are better than men at managing money in the short term - there's no question around that.

"This is around the investment area where there is less confidence and less knowledge. However, when women do invest they tend to be more successful than men because their appreciation of risk is higher.

"Women access financial advice less often and I wonder if that's a trust issue for the industry to reflect on. In terms of individuals responses, women often have to see money as a means to an end. It's not the acquisition of money that's the point here."

She wondered if older women were "a little less successful on this" because they had very little education on financial issues unless they had a profession that helped them.

"In the middle years when investment is an important aspect of trying to build your money women are often involved in caregiving and maybe juggling jobs and the rest of it, and learning about this stuff is not simple. You need time, you need head space, and in the middle years, that is something many of us are short of."

Wrightson had hopes the situation would change.

Only 22 percent of people answered all the questions in the survey correctly, and while the results showed New Zealanders had a good understanding of inflation, interest and risk and return, they struggled with understanding compound interest, risk diversification and the time value of money - key concepts in growing money long term, particularly for retirement savings.